A doji is a candlestick whose open and close are equal or very close; it records little net change but does not by itself predict a reversal.
A doji is a candlestick whose open and close are equal or very close relative to its full high-low range. It records little net movement from the beginning to the end of the selected period, even though price may have moved substantially within that period.
Doji candles are often described as indecision or balance between buyers and sellers. That is an interpretation, not an observable fact about participants. The candle proves only the recorded OHLC relationship; its significance depends on the prior trend, range, location, liquidity, session, and subsequent price behavior.
For open (O), high (H), low (L), and close (C):
absolute value of (C - O);H - L; andabsolute value of (C - O) / (H - L) when the range is positive.An analyst might define a doji as a candle whose body is no more than a stated percentage of its range. That percentage is a research choice, not a universal market standard. A minimum range or volume rule may also be needed so a nearly unchanged, barely traded period is not mistaken for a meaningful pattern.
| Feature | What to record | Why it matters |
|---|---|---|
| Open-close difference | Absolute and relative body size | Determines whether the candle meets the chosen doji tolerance |
| Upper shadow | High minus the body’s upper edge | Distinguishes upper-range excursions |
| Lower shadow | Body’s lower edge minus the low | Distinguishes lower-range excursions |
| Full range | High minus low | Provides scale for the small body |
| Tick size | Minimum permitted price increment | Can make exact open-close equality more common in some instruments |
| Volume and trades | Activity during the period | Helps identify sparse or unrepresentative candles |
Assume a daily candle has:
| OHLC field | Price |
|---|---|
| Open | $50.00 |
| High | $52.00 |
| Low | $48.00 |
| Close | $50.05 |
The body is $0.05, and the full range is $4.00. The relative body size is:
$0.05 / $4.00 = 1.25%.
If the analyst’s pre-defined doji rule allows a body up to 5% of the full range, this candle qualifies. If the rule requires the open and close to be exactly equal, it does not.
The OHLC data do not reveal whether the high occurred before the low, whether one large trade set an extreme, or which participant group was more informed. Intraday data would be needed to reconstruct more of the path.
| Variant | Typical shape | Common interpretation | Required caution |
|---|---|---|---|
| Standard doji | Small body with upper and lower shadows | Little net open-to-close change | Can be ordinary noise in a quiet market |
| Long-Legged Doji | Small body with long shadows on both sides | Large intraperiod movement but little net change | Does not reveal the order of the high and low |
| Dragonfly doji | Open and close near the high with a long lower shadow | Possible recovery from lower prices | Similar shape can fail or occur without a prior decline |
| Gravestone Doji | Open and close near the low with a long upper shadow | Possible failure to retain higher prices | Not inherently bearish outside trend and location context |
Names summarize geometry; they do not assign a fixed probability or trade action.
A doji after a sustained rise can flag that upward progress paused. It does not prove that the trend ended. A later break below a pre-defined level may be used as confirmation, but the exact level and execution rule must be stated.
A doji after a sustained decline can flag reduced net downward progress. The market can still continue lower, gap through the candle, or remain range-bound.
Doji candles are often less distinctive in a narrow, two-sided range because many periods already close near where they opened. Comparing the candle with recent ranges and the frequency of similar candles can prevent overinterpretation.
An earnings announcement, policy decision, holiday session, trading halt, or sparse market can produce unusual OHLC geometry. Event timing, volume, spreads, and whether the information arrived before or after the close should be checked.
“Wait for confirmation” is incomplete unless the confirmation rule is measurable. Possible rules include:
Each choice changes entry timing, false-signal frequency, and potential loss. A confirmation candle does not make the outcome certain; it is another historical observation.
This article provides general chart-reading education, not a market forecast, trading signal, or personalized investment advice.